Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) has agreed to spend up to $1.08 trillion in the years ahead. Meanwhile, Google Cloud has $561 billion in signed contracts not yet counted as revenue.
CFO Anat Ashkenazi gave both figures on the company’s third-quarter earnings call Wednesday evening, and Alphabet has not yet filed its quarterly report.
- GOOGL stock is plunging after earnings. Get all the details here.
Breaking Down the Commitments
The $1.08 trillion includes $924 billion in future purchase commitments, plus $152 billion in pre-commencement leases and other obligations. The agreements run for multiple years and cover technical infrastructure, inventory, leases and energy.
Actual spending could come in lower as Ashkenazi said the amounts reflect maximum contractual obligations, and many of the deals allow pricing and volumes to shift. The commitments also support all of Google, including Search, YouTube, Gemini and Cloud, and measuring them against the Cloud backlog alone makes the gap look wider.
The Cloud Backlog
The $561 billion counts signed Cloud customer contracts not yet booked as revenue and excludes cancellable deals. The backlog rose from $514 billion at the end of the second quarter. Alphabet expects to recognize more than 55% of it over the next 24 months, or about $310 billion.
Cloud had a blockbuster quarter. Revenue doubled from a year earlier to $30.71 billion, and segment operating income more than tripled to $11.12 billion.
Cloud CEO Thomas Kurian said 18 of the unit’s product lines now generate more than $1 billion each in revenue and the segment’s profit margin widened to 36.2%.
Spending Weighs on the Stock
The rest of the report drew a harsher reaction. Alphabet missed Wall Street’s profit and revenue estimates, and its shares fell more than 10% in extended trading. The company had not missed on both lines in nearly four years.
Capital expenditures hit $51.4 billion in the quarter, more than doubling $24 billion from a year earlier. Free cash flow was negative $9.07 billion, and next year will cost even more.
Ashkenazi kept the 2026 capex forecast at $195 billion to $205 billion and said spending would rise significantly in 2027, though executives gave no number. Ashkenazi also said building up inventory of Google’s TPU chips would put more strain on free cash flow.
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Cash on Hand
Alphabet ended the quarter with $265.1 billion in cash and marketable securities and $125.1 billion in debt. The company raised $84.8 billion in equity in June to fund its AI buildout, with $10 billion from Berkshire Hathaway Inc. (NYSE:BRK) (NYSE:BRK).
The quarterly filing should add detail on the commitments once it is published. Ashkenazi said Alphabet will share more about 2027 capital spending on its fourth-quarter call.
GOOGL Stock Price Activity: Alphabet stock was down 12.67% at $283.74 at the time of publication Thursday, according to Benzinga Pro market data.
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